Foolproofing Fintech? The UK government experiment
No one can now doubt that London is the Fintech capital of Europe. It is definitely one of the world´s fastest growing tech hubs and has now become the go-to destination for a lot of Fintech entrepreneurs.
London now has over 44,000 Fintech workers, (and over 155,600 digital tech professionals) more than Silicon Valley and New York.
What´s unique in the UK is the Fintech interconnectedness. The Fintech infrastructure functions as one interconnected hub. This has fostered a greater movement of talent and ideas between cities at a local and macro level. The catalyst has been the government which continues to champion nationwide collaboration with London remaining the nucleus of activities.
In 2015, London is poised to become the world´s largest centre for Fintech with investment growing faster than anywhere else in the world. It can to some point be attributed to a confluence of all the right ingredients for Fintech entrepreneurs:
- It´s a leading global financial centre
- You can access talent from a pool of 44,000 employees working in London’s Fintech sector and 155,600 digital tech professionals
- More than half of all Fintech investment in Europe is channeled into London
- Super-fast broadband and transport networks
- Full political support and government involvement
Something to astound: Earlier this year, London was named home to half of all the startups on this year’s FinTech50 list.
Even if there’s a slight depression in the macro market – whether it’s the euro, Swiss franc or in China – that’s still a really good time for FinTech innovation in London – Eileen Burbidge, Passion Capital.
Eventually, we have to ask. What should be the appropriate role of government in innovation? Aside from fostering a culture favorable to Fintech, what role can and should the UK government continue to play? Should this role involve control? And to what degree? Is it to minimize the impact of the technological disintermediation of banks? For example, Fintech companies have the potential to disrupt the payment system resulting in a loss of current central bank oversight and management.
UK Fintech and the provision of government Leadership
The UK government involvement will yield clarity in the search for transparency in Fintech – “I know what I´m buying and I know what I´m paying”: from the beginning of the crisis of 2008, financial scandals involving the opacity of banks and misleading financial products still exist to some extent. Is the UK government thinking in terms of managing the Fintech infrastructure in order to minimize future potential risk? Sort of like a lessons-learned approach?
The one defining impact of the UK government involvement is that it helps Fintech transcend the current regulatory structural models by providing a buffer for the Fintech ecosystem thereby maintaining stability.